The Georgia Budget and Policy Institute’s (GBPI) mission is to advance lasting solutions that expand economic opportunity and well-being for all Georgians. GBPI welcomes the opportunity to comment on the Department of Education’s proposal notice of proposed rulemaking (NPRM) addressing the implementation of the changes to the Title IV, Higher Education Act (HEA) programs included in Pub. L. 119-21, in H.R. 1 particularly regarding the student loan, Repayment Assistance Program (RAP), to guide the Reimagining and Improving Student Education (RISE) Committee.
Specifically, GBPI would like to address the following goal of the RISE committee:
In rulemaking, include an income-based repayment plan that ensures that all borrowers have access to a streamlined and simple process that is accessible. This repayment plan should include automatic relief and a shorter repayment process (less than 30 years). Monthly payments should be scaled based on the borrower’s income to mitigate loan default and reduce financial stress.
Why this Matters in Georgia
Georgia ranks third in the nation for student loan debt per borrower, with over 1.6 million borrowers in the state, totaling $69 billion of student loan debt. The RAP no longer excludes a specific percentage of borrower’s income from being considered as funds available for student loan payments. Basing student loan borrowers’ payments on their full income, (AGI) will only cause more financial stress and increase the payment according to $10,000-increment increases in income.
This will cause wide disparities in the payments of individuals with very similar incomes. For example, one borrower with a $30,000 annual income could have a max monthly payment of $50. Another borrower who makes $30,001 would have a payment of $75 per month. (example drawn from The Institute for College Access and Justice).
RAP’s increase in student loan payments and increase in repayment time will only worsen the student loan debt crisis in Georgia. This issue especially affects racially marginalized students. Black students only represented 25% of students in the University System of Georgia; however, they account for 44% of Pell Grant recipients and carry 46% of student loan debt. Additionally, Georgia is only of few states that do not offer state-sponsored need-based financial aid. Across the nation states spend 74% on need-based aid and 26% on merit-based aid on average. In Georgia, 99% of financial aid is merit-based, and 1% is need-based financial aid.
As such, many Georgia students and specifically those who are financially marginalized are not set up for success. Given the lack of equitable resources from the beginning and increasing college costs, students are more reliant on student loans. Improvement to the RAP plan is urgent for all Georgians, as the plan will disproportionately affect Georgia residents of color, who carry higher student loan debt.
In closing, we hope the RISE Committee with consider the following:
- Include an income-based repayment plan which ensures that all borrowers have access to a streamlined and simple process that is accessible.
- Institute a repayment plan with automatic relief in the form of a shorter repayment process, less than 30 years.
- Create an income-based repayment plan with a formula that scales payments based on the borrower’s income, to mitigate loan default and reduce financial stress.
